Chris Hansen and Jack Tate

Sens. Chris Hansen of Denver and Jack Tate of Centennial talk about a referred measure to the November ballot to repeal Colorado's Gallagher Amendment on Monday, June 8, 2020.

The Colorado Senate passed a measure that would allow voters to decide in November whether to get rid of a budget control on property taxes that shortchanges local governments, special districts and schools.

The bill passed on a voice vote Monday and will face a roll call vote in the Senate before advancing to the House. The resolution does not decide the question, but rather puts it before voters statewide in November, allowing proponents to bypass collecting 124,632 signatures from registered voters before Aug. 3 to qualify.

The 38-year-old constitutional amendment, called the Gallagher Amendment, balances the taxes paid by businesses and residential property owners, meaning when home values on a statewide average grow faster than commercial properties, homeowners pay proportionately less while businesses pay more.

"The Gallagher Amendment does not determine the overall amount of property taxes paid," explained Sen. Jack Tate, a Republican from Centennial, who is a sponsor of the bipartisan proposal, Senate Concurrent Resolution 1.

In rural Colorado, where there's not a lot of business property, the equation comes up short for those trying to fund classrooms, fire departments, hospitals and other local needs.

Tate said Gallagher manipulates the division of that pie of tax revenue by adjusting one rate in proportion to the other, "all based on statewide averages."

As a result, residential property assessment rates have declined from 21% then to 7.15% now.

"The opposite is true for business property," Tate said. "We can't go any further transferring that tax liability to the business community, especially at a time the business community is crippled by the current economic situation."

He said the statewide averages are "blind to the differences between (poor) Cortez and (wealthy) Carbondale."

"It is ready to pull the rug out from under a local, rural community merely based on the value of Denver-based real estate," Tate argued. 

If communities respond by raising the taxes, it only exacerbates the unfair burden on local business, because Gallagher is in place. 

We have kept property taxes low for the average homeowner in the state of Colorado," said Chris Hansen, a Denver Democrat who is one of the bill's sponsors. "But the consequences of continuing with the Gallagher Amendment are stark."

He said the economic collapse is certain to "hammer" education without a change to Gallagher.

Senate Republican leader Chris Holbert of Parker opposed the resolution.

"It's that right now there are more people wanting money from government, and yesterday there were more people who wanted money from government — and a year ago and 10 years ago and 10 years in the future there are and will be people and organizations who want more money from government," Holbert said.

"Right now it's difficult to get more money out of property taxes."

He said that while the rate has been going down, his taxes in Douglas County keep going up, because the value of his property is going up.

Holbert said if the rate stays the same, without the Gallagher adjustment, then the price homeowners will pay will go up faster. Though another proposed piece of legislature could be aimed at capping that rate, Holbert noted that this legislature can't control what a future one might do to raise the property tax rate.

"We cannot bind that future legislature," he reminded senators. "... My experience is that there are people, there are organizations, that exist to advocate within the chambers of this legislature for one thing: more money.

"And when they get more money, their demand, their request, what they advocate for transitions from more money to (even) more money." 

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